Tel Aviv Stock Exchange Opens Amid US-Iran Tensions and Tech Earnings Anticipation

The Tel Aviv Stock Exchange (TASE) begins the week under heightened geopolitical tension following US military strikes on Iranian targets overnight, escalating the fragile ceasefire between the two nations. This development has pushed crude oil prices up by about 3%, with WTI crude surpassing $85 per barrel and Brent crude exceeding $91. Dual-listed stocks such as Enlight and NICE are expected to rise over 1%, while Nova may decline by approximately 2.5%. Globally, US futures show modest gains up to 0.4%, Asian markets present mixed trends, with Hang Seng and Shanghai indices rising 2% and 1.5% respectively, but South Korea’s Kospi index falls nearly 3%, reflecting its growing role as a leading indicator for AI and semiconductor stocks worldwide.

Despite last week’s declines on Wall Street, TASE indices showed resilience: TA-35 rose 2.1%, TA-90 by 0.9%, the banking index surged 4%, and the oil and gas index jumped 5.5%, boosted by Isramco’s gas export memorandum with Egypt. However, Israeli companies tied to the semiconductor and AI sectors, such as Tower, Camtek, and Nova, remain vulnerable to global sentiment shifts. Isracard also draws attention after withdrawing from negotiations to acquire digital bank esh less than six months after announcing a memorandum of understanding. The market will be closed on Thursday for Tisha B’Av.

Investors face a busy week with major US tech earnings reports from Alphabet and Tesla on Wednesday, followed by Intel and IBM, which could set the tone for the market. The semiconductor sector has lost over $3 trillion in market value since June 22, with the SOXX ETF dropping 10% last week, marking its worst week since March 2025. Analysts will closely watch whether tech giants can justify their high valuations amid heavy AI investments.

In the bond market, long-term US Treasury yields remain elevated due to increased risk premiums linked to fiscal deficits, debt issuance, and geopolitical risks, despite expectations of stable short-term interest rates. Alex Zvezhinski, chief economist at Bank Mizrahi-Tefahot, noted that risk premiums have kept yields high even as inflation concerns ease.

The shekel trades steadily at about 3.03 per US dollar after weakening 1.3% last week. Bank of America projects further dollar strength in the second half of 2026, driven by Middle East tensions, AI investment inflows, and expectations of multiple Federal Reserve rate hikes, contrasting with market consensus.

Economist Shafir from Bank Hapoalim highlights accelerated Israeli economic growth in Q2, with a 2.5% rise in June’s monthly activity index and ongoing private consumption expansion. However, the strong shekel has eroded exporters’ profitability, especially in industry. Inflation remains moderate overall but service prices and rental costs show upward pressure. A 50% chance of a rate cut in early September is considered.

Bank of America maintains "buy" ratings on Alphabet, Tesla, and Microsoft, expecting upcoming earnings to demonstrate returns on AI investments. Alphabet’s growth drivers include its resilient search engine and cloud services, while Tesla’s focus is on autonomous driving and AI integration. Microsoft’s Azure cloud is forecasted to grow 39%-40% year-over-year, with capacity constraints easing. Despite short-term challenges, these companies are viewed as long-term growth opportunities.